I’m blogging 40 years to the day after the President of the United States went on television to declare a very odd sort of war. On that October evening in 1974, President Gerald Ford addressed told members of Congress that it was time to WIN. By WIN, he meant the letters W-I-N, the administration’s new campaign to “Whip Inflation Now.”
Back then, the country faced a terrible economic problem. After the Middle East oil embargo the year before, inflation in 1974 would soar to 11 percent. This was crippling for families with wages and salaries that were not keeping up with these sharp rises in prices. They would, in time, demand raises from their bosses to compensate, and that, in turn would drive up the price of goods and services. Economists normally blame inflation on central banks letting the supply of money get out of hand, but in this case the oil producer’s cartel, OPEC, got the blame.
Here is where the modern idea of crowd sourcing came in.
“My fellow Americans,” the President said, “ten days ago I asked you to get things started by making a list of 10 ways to fight inflation and save energy, to exchange your list with your neighbors, and to send me a copy. I have personally read scores of the thousands of letters received at the White House, and incidentally, I have made my economic experts read some of them, too.”
People who sent their helpful hints to Washington would get a little red Whip Inflation Now lapel pin in return. They would wear this with pride, a sign they were proud foot soldiers in the inflation battle.
Ford shared an example of the ideas he was looking for. “Every housewife knows almost exactly how much she spent for food last week,” Ford said in the speech. “If you cannot spare a penny from your food budget—and I know there are many—surely you can cut the food that you waste by five percent.”
Many experts thought this Whip Inflation Now campaign was a knuckleheaded idea.
“The problem of controlling inflation is a federal reserve problem and asking the public to solve the problem is both not effective and burdensome,” said Allan Meltzer, the Allan H. Meltzer University Professor of Political Economy at Carnegie Mellon.
Meltzer knew and liked President Ford and thought he was well-intentioned. However, he feels Ford was let down by his advisors. If a household switches from orange juice to, say, tap water as a hedge against inflation, what do the consumers do with the extra money? Not save it, but probably they would spend it and that spending would continue to feed inflation.
“The main thing you can say about those buttons is they came just at the time that the economy headed into a recession. So that threw his Whip Inflation Now program into the ash can,” Meltzer said.
Inflation didn’t really get tamed until the 1980s, following tough medicine from a Federal Reserve chairman named Paul Volcker. As for those WIN buttons, I just bought one on EBay for $2.
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